(Bloomberg) -- Gold rose to the highest in nine weeks as disappointing US factory data and a drop in consumer sentiment reinforced bets on the possibility of interest-rate cuts later this year. 

Signs of a softening economy solidified expectations that the Federal Reserve will need to lower borrowing costs to help shore up the economy. Higher rates are typically negative for non-yielding bullion. 

The precious metal has largely held above the key $2,000 level since mid-December on bets of the Fed’s pivot to monetary easing. That view hasn’t changed even though expectations of the timing and size of the central bank’s rate reduction varied against mixed US economic data recently. 

Data released Friday showed a measure of US factory activity shrank at a faster pace in February as orders, production and employment contracted, suggesting manufacturing is struggling for momentum. Separate data showed US consumer sentiment fell in February for the first time in three months as current and expected views of the economy deteriorated. Treasury yields tumbled, helping send bullion higher by as much as 2.2%, the biggest intraday increase since Dec. 13.

Today’s rally “is likely short-cover driven as discretionary investors continue to be underpositioned in gold,” said Bart Melek, global head of commodity strategy at TD Securities. Melek sees bullion moving to $2,300 or higher “once there’s more certainty surrounding the timing and magnitude of the pending Fed pivot.”

Remarks from a slew of Fed officials also weighed on bond yields, which in turn boosted bullion. 

Federal Reserve Governor Christopher Waller said he would like the central bank to boost its share of short-term Treasuries. Also speaking Friday, Fed Bank of Chicago President Austan Goolsbee told CNBC he believes the Fed funds rate is quite restrictive. Separately, his Richmond counterpart Thomas Barkin said markets are pricing in fewer rate reductions in response to economic data. Dallas Fed chief counterpart Lorie Logan reiterated it’ll likely be appropriate to start slowing the pace at which it shrinks its balance sheet.

Read More: Fed Latest: Waller Says Fed’s Mortgage Holdings Should Dwindle

Spot gold climbed 2% to $2,083.52 an ounce as of 4:31 p.m. in New York, on track for its second consecutive weekly gain. Silver, platinum and palladium all rose.

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